JP Morgan Chase 2006 Annual Report Download - page 144

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JPMorgan Chase & Co.
142 JPMorgan Chase & Co. / 2006 Annual Report
Note 34 – Parent company
Parent company – statements of income
Year ended December 31, (in millions) 2006 2005 2004(c)
Income
Dividends from bank and bank
holding company subsidiaries $ 2,935 $ 2,361 $ 1,208
Dividends from nonbank subsidiaries(a) 1,999 791 773
Interest income from subsidiaries 3,612 2,369 1,370
Other interest income 273 209 137
Other income from subsidiaries, primarily fees:
Bank and bank holding company 220 246 833
Nonbank 739 462 499
Other income (206) 13 204
Total income 9,572 6,451 5,024
Expense
Interest expense to subsidiaries(a) 1,025 846 603
Other interest expense 4,536 3,076 1,834
Compensation expense 519 369 353
Other noninterest expense 295 496 1,105
Total expense 6,375 4,787 3,895
Income before income tax benefit and
undistributed net income of subsidiaries 3,197 1,664 1,129
Income tax benefit 982 852 556
Equity in undistributed net income (loss)
of subsidiaries 10,265 5,967 2,781
Net income $ 14,444 $ 8,483 $ 4,466
Parent company – balance sheets
December 31, (in millions) 2006 2005
Assets
Cash and due from banks, primarily with
bank subsidiaries $ 756 $ 461
Deposits with banking subsidiaries 18,759 9,452
Securities purchased under resale agreements,
primarily with nonbank subsidiaries —24
Trading assets 7,975 7,548
Available-for-sale securities 257 285
Loans 971 338
Advances to, and receivables from, subsidiaries:
Bank and bank holding company 22,765 22,673
Nonbank 34,282 31,342
Investments (at equity) in subsidiaries:
Bank and bank holding company 119,017 110,745
Nonbank(a) 22,552 21,367
Goodwill and other intangibles 853 804
Other assets 11,983 10,553
Total assets $ 240,170 $ 215,592
Liabilities and stockholders’ equity
Borrowings from, and payables to, subsidiaries(a) $ 19,183 $ 16,511
Other borrowed funds, primarily commercial paper 21,011 15,675
Other liabilities 7,605 7,721
Long-term debt(b) 76,581 68,474
Total liabilities 124,380 108,381
Stockholders’ equity 115,790 107,211
Total liabilities and stockholders’ equity $ 240,170 $ 215,592
Parent company – statements of cash flows
Year ended December 31, (in millions) 2006 2005 2004(c)
Operating activities
Net income $14,444 $ 8,483 $ 4,466
Less: Net income of subsidiaries 15,199 9,119 4,762
Parent company net loss (755) (636) (296)
Add: Cash dividends from subsidiaries(a) 4,934 2,891 1,964
Other, net (185) (130) (81)
Net cash provided by operating activities 3,994 2,125 1,587
Investing activities
Net change in:
Deposits with banking subsidiaries (9,307) 1,251 1,851
Securities purchased under resale agreements,
primarily with nonbank subsidiaries 24 (24) 355
Loans (633) (176) 407
Advances to subsidiaries (3,032) (483) (5,772)
Investments (at equity) in subsidiaries 579 (2,949) (4,015)
Other, net (1) 34 11
Available-for-sale securities:
Purchases —(215) (392)
Proceeds from sales and maturities 29 124 114
Cash received in business acquisitions —— 4,608
Net cash used in investing
activities (12,341) (2,438) (2,833)
Financing activities
Net change in borrowings
from subsidiaries(a) 2,672 2,316 941
Net change in other borrowed funds 5,336 625 (1,510)
Proceeds from the issuance of
long-term debt 18,153 15,992 12,816
Repayments of long-term debt (10,557) (10,864) (6,149)
Net proceeds from the issuance of stock
and stock-related awards 1,659 682 848
Excess tax benefits related to
stock-based compensation 302 ——
Redemption of preferred stock (139) (200) (670)
Treasury stock purchased (3,938) (3,412) (738)
Cash dividends paid (4,846) (4,878) (3,927)
Net cash provided by financing
activities 8,642 261 1,611
Net increase (decrease) in cash and due
from banks 295 (52) 365
Cash and due from banks
at the beginning of the year, primarily
with bank subsidiaries 461 513 148
Cash and due from banks at the end of the
year, primarily with bank subsidiaries $ 756 $ 461 $ 513
Cash interest paid $ 5,485 $ 3,838 $ 2,383
Cash income taxes paid $ 3,599 $ 3,426 $ 701
(a) Subsidiaries include trusts that issued guaranteed capital debt securities (“issuer trusts”).
As a result of FIN 46R, the Parent deconsolidated these trusts in 2003. The Parent received
dividends of $23 million, $21 million and $15 million from the issuer trusts in 2006, 2005 and
2004, respectively. For further discussion on these issuer trusts, see Note 19 on page 125 of
this Annual Report.
(b) At December 31, 2006, debt that contractually matures in 2007 through 2011 totaled $10.6
billion, $12.4 billion, $13.7 billion, $4.3 billion and $13.5 billion, respectively.
(c) 2004 results include six months of the combined Firm’s results and six months of heritage
JPMorgan Chase results. For further discussion of the Merger, see Note 2 on pages 95–96 of
this Annual Report.